How California’s SB 574 Impacts Lawyers Using AI

A couple of weeks ago, I wrote about a suite of legislative activity in California that introduces new AI rules and regulations. One of these bills, SB 574, pertains to lawyers using AI specifically. The bill introduces several new restrictions on generative AI use by lawyers, but the most interesting is its ban on delegating the practice of law to generative AI systems. On its face, this rule appears to fit well into existing limitations on the practice of law. After all, we prohibit non-lawyers from providing legal services, how are chatbots any different? However, the details of the bill are where things get tricky. A recent A&O Shearman memo explains how the ill-defined “delegate the practice of law” could prove problematic:

“Today, the technology that definition must account for is far more capable than the bankruptcy software at issue in Reynoso. Legal practice is now augmented by AI, including agentic systems that might plan and execute multistep tasks autonomously, such as running first-pass review across thousands of contracts in connection with merger and acquisition due diligence, populating diligence issue lists, and parsing discovery populations that once consumed hundreds of attorney hours. Those are precisely the high-volume, judgment-adjacent tasks that a flat prohibition on “delegating the practice of law” may be potentially read to reach, even though attorneys already rely on staff, contract reviewers, and technology to perform similar work under supervision.”

Lawyers using AI should be aware of the law’s other provisions. It introduces a requirement that all generative AI content submitted to the court be labelled. It also requires attorneys to use “reasonable steps” to verify AI outputs. There is a prohibition on entering confidential information into public AI systems and on relying on generative AI systems in arbitration. The ambiguity in the delegation terminology may be enough to see SB 574 vetoed. However, if the Governor signs the bill, we’ll likely see some interesting case law arise from it.